Thinking about buying a new home but not sure about the market conditions? In a recent article by Houston Business Journal, Paul Takahashi reported:
Despite the oil slump, Houston’s housing market faces its best years yet.
Mark Dotzour, former chief economist for Texas A&M University’s Real Estate Center, shared this message to hundreds of developers, homebuilders and contractors gathered for the Greater Houston Builders Association’s midyear economic forecast on May 24.
Houston’s economy — particularly its housing market — has remained surprisingly resilient, even as energy companies declare bankruptcies, cut thousands of jobs and shut down rigs, Dotzour said.
“It’s stunning, astonishing, astounding,” Dotzour said. “It’s amazing how resilient the housing market is in Houston when you’re in the middle of a root canal.”
Unlike previous economic downturns, Houston’s single-family housing market is not overbuilt. Houston posted a 3.6-month home inventory in April, still well below the 6-month mark, which indicates a healthy, balanced market, Dotzour said.
“There aren’t enough homes for sale in this town. Our inventory is real low,” Dotzour said. “That’s the beauty of this cycle. Usually, we are way overbuilt, but we’re not way overbuilt at all. There’s no massive overbuilding.”
Dotzour predicts a bull market for housing both locally and nationally over the next five to 10 years. That’s because single-family home construction nationwide hasn’t fully recovered from the Great Recession. And once Millennials jump into the housing market in droves, demand for single-family homes will skyrocket, Dotzour said.
“If you’re selling houses to people who are wealthy — homes $800,000 and north of that — those customers will be more reticent,” Dotzour said. “The outlook for moderately priced homes is strong. The bottom half of the market, those people are just getting on the dance floor.”
Houston homebuilders won’t have to worry about mortgage interest rates rising in the near term, Dotzour said. Although the Federal Reserve is looking at raising interest rates, inflation is the key factor influencing mortgage interest rates, he said.